Comments by "Greg Greg" (@SlowhandGreg) on "BBC News"
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from the LSE and lets not forget there's a 2 billion tax break for bankers in the next budget, government money is NOT a household budget it circulates generating more economic activity reducing / increasing wages has pro's and Con's
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Pay rises are affordable
In the first instance, our intention was to undertake this analysis for AFC staff across the entire United Kingdom. However, as a result of limited data availability, to assess the affordability to the Government of potential pay increases for AfC staff, we estimated the net Exchequer impact associated with an illustrative 10% increase in the total pay bill for AfC staff in England (only) in 2021-22. Despite the focus of this analysis being AFC staff in England, the economic benefits accrued by the Exchequer reflect the enhanced spending benefitting all industries throughout the entire UK economy.
The headline Exchequer cost associated with this 10% pay bill increase was estimated to be £3.40bn. However, offsetting this cost, the aggregate Exchequer benefit resulting from this 10% increase in total AfC pay was estimated to be £2.74bn (or 81% of the initial Exchequer cost), consisting of:
£1.60bn in additional tax receipts from AfC staff and their employers – with PAYE taxation, employee National Insurance and employer National Insurance offsetting 22%, 11% and 14% of the initial Exchequer cost, respectively;
£0.89bn in wider direct, indirect, and induced tax receipts generated by AfC staff’s increased consumption throughout the entire economy – offsetting a further 26% of the initial Exchequer cost;
£0.13bn in cost savings from the improved recruitment and retention of NHS nurses and midwives (equating to 21,790 service years over the period of analysis) – offsetting a further 4% of the initial Exchequer cost; and
£0.13bn in cost savings from lower student loan write-offs for nursing students – offsetting a further 4% of the initial Exchequer cost.
The net cost to the Exchequer associated with this illustrative 10% increase in the total bill for AfC staff pay in England was therefore estimated to be £0.66bn. To place this in context, this net Exchequer cost represents approximately 0.075% of total government expenditure in 2019-20 – equivalent to 7½ pence per £100 of government expenditure.
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